Certain of our comments will contain forward-looking statements, which are intended to be covered by the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to defer materially from those we currently anticipate due to a number of factors, many of which are beyond our control.Among those factors are; general economic conditions and trends, both nationally and in our local markets; changes in interest rates, which may affect our net income, prepayment penalty income, mortgage banking income and other future cash flows or the market value of our assets including our investment securities; changes in deposit flows and in the demand for deposit loan and investment products and other financial services; and changes in legislation, regulation and policy. You will find more about the risk factors associated with our forward-looking statements on Page 8 of this morning’s earnings release and in our SEC filings, including our 2010 Annual Report on Form 10-K, and our first and second quarter of 2011 10-Q. The release also includes reconciliations of certain GAAP and non-GAAP earnings and capital measures, which will be discussed during this conference call. If you would like a copy of the earnings release, please call our Investor Relations department at 516-683-4420, or visit us on the web at firstname.lastname@example.org. To start the discussion, I’ll now turn the call over to Mr. Ficalora, who will provide a brief overview of our third quarter performance before opening the line for Q&A. Mr. Ficalora? Joseph Ficalora Thank you, Ilene and thank you all for joining us this morning, as we discuss our third quarter 2011 performance, which was notable for a variety of reasons including solid earnings driven in part by increased mortgage banking income and excluding prepayment penalty income, a stable net interest margin, continued capital strength, meaningful loan growth, improved asset quality and continued efficiency.
To begin, we reported GAAP earnings of $119.8 million in the current third quarter, which generated a 1.27% return on average tangible assets and a 16.43% return on average tangible stockholders’ equity. We also reported operating earnings of $117.1 million in the quarter, which generated returns of 1.25 and 16.08 respectively.At $0.27 per diluted per share our third quarter GAAP earnings was consistent with those reported in the trailing quarter. Our operating earnings were also equivalent to $0.27 per diluted share and we are a penny higher than those reported in the trailing three month period. The modest difference between our GAAP and operating earnings was primarily attributable to net securities gain. We also reporting cash earnings $130.2 million for the quarter which contributed 10.5 million more to tangible stockholders’ equity than our GAAP earnings and we are equivalent to $0.30 per diluted share. Excluding accumulated other comprehensive loss from the calculation, our ratio of adjusted tangible stockholders’ equity to adjusted tangible assets was 7.92% at quarter end. Given our earnings capacity and the strength of our capital position, the board of directors last night declared our 31st consecutive quarterly cash dividend of $0.25 per share. The dividend will be paid on the November 17th to shareholders of record on November 7th. Returning to the third quarter performance, I’d like to start with linked-quarter increase in mortgage banking income which was driven by was attributable by a significant rise in originations at one-to-four family loans for sale. Through the course of quarter, mortgage banking income more than doubled to $24.3 million as homeowners took advantage of the substantial decline in residential mortgage interest rates. While the decline in residential mortgage interest rates had a significant impact on our mortgage banking income, our interest income and margin were minimally pressured by the linked-quarter decline in market interest rates.
Prepayment penalty income added contributed 14 basis points to the our net interest margin in the current third quarter, in contrast to 30 basis points in the second quarter of this year. At 3.33%, our net interest margin was 17 basis points narrower on a linked-quarter basis with 16 of those basis points stemming from the decline in prepayment penalties, enhance excluding prepayment penalty income, the margin declined 1 basis point.We expecting third quarter origination at $1.9 billion and a linked-quarter decline in repayments. Our portfolio of non-covered held for investment loans rose $638 million linked-quarter to $25.1 million at the end September representing an annualized growth rate of 10.4%. Included in the held-for-investment loans or multifamily loans of 17.3 billion and commercial real estate loans at 6.6 billion, up 215.4 million and 449.9 million respectively from the balances recorded at the end of June. The linked-quarter increase in held-for-investment loans occurred in tandem with a $513.5 million rise in one-to-four loans held for sale to $1 billion reflecting the increase in originations and $135 million decline in the balance of covered loans to $3.9 billion as such loans were repaid. We reported a pipeline of approximately $3.8 billion as of this morning including one-to-four family loan held for sale of approximately 2.3 billion and approximately 1.5 billion of held for investment loans. Read the rest of this transcript for free on seekingalpha.com